As Labour begins its annual jaunt in Manchester, Scotland and Wales are providing the testing ground for the two debates likely to dominate much of the party conference.

Firstly, the one the leadership would prefer to put to bed is the simple question of whether the party could possibly form a coalition with the Lib Dems in the event of it being the largest party in a hung Parliament by 2015. The debate was this weekend ignited once again, with two senior members of the Welsh Labour Party seemingly at odds about the prospects of such a coalition.

Whilst recognising the party’s defeat in 2010 was such that achieving an outright majority would be difficult, shadow Welsh secretary Owen Smith pointedly sought to play down the prospects of any Lib/Lab pact.

“We’re definitely the underdogs in this fight right now but we’re doing better than we were last year, we’re doing better certainly than we were two years ago and I don’t think we really need to start thinking right now – interesting a parlour game though it is – about whether we go into coalition with the Lib Dems or anyone else.”

He went on to say that forming a coalition with the Lib Dems would be:

“…difficult, truthfully, because I think we feel that the Lib Dems have propped up a very right-wing Conservative government.”

His remarks, however, seemed to stand in stark contrast with his predecessor, the Welsh big beast, Peter Hain, who used an article in the Independent on Sunday to call on the party to maturely prepare for the prospects of coalition governments becoming the norm.

Echoing Vince Cable’s assertion last week that a hung Parliament was most likely in 2015, Hain argued:

“Despite Labour’s strong recovery, there is no reason to suppose the two main parties will bounce back to their previous hegemony.

“As political scientist John Curtice has argued:

“The hung parliament brought about by the 2010 election was no accident. It was a consequence of long-term changes in the pattern of party support that mean it is now persistently more difficult for either Labour or the Conservatives to win an overall majority.”

“Coalition politics may become a semi-permanent fixture in British parliamentary democracy. In which case, such politics must be enacted a lot better than by Cameron and Clegg, who have made it a byword for betrayal of election promises, incompetence and dogmatic addiction to a failed economic policy.

“If it is the will of the people that no party should govern alone, they deserve a more mature approach to coalition government, and that means Labour radically rethinking the way the party does politics.”

Concluding a coalition would be difficult if Nick Clegg remained as Lib Dem leader, he continued:

“So, on a good day Labour could well defy the odds and win outright in 2015. Even on a bad day, and doubtless after a relentlessly negative and well-resourced Tory assault, Labour is well-placed to be the largest party, able to form a government.

“But with whom? It seems likely that the “Orange Book” Lib Dem leadership – which hijacked their party and took it into bed with the Tories – will be rejected by a membership desperate to restore the tradition of Asquith, Lloyd George, Keynes, Beveridge, Grimond, Steel, Ashdown, Kennedy and Campbell.

“A new Lib Dem leadership more in tune with the party’s traditions will make it much easier for Ed Miliband to strike a deal – assuming, of course, that there are sufficient Lib Dem MPs remaining after a probable battering.

“In that context, Ed Miliband’s vision of Labour holds great attractions for those anxious to establish a government for the progressive, anti-Tory majority that was often denied office in the last century.

“The shifting tectonic plates of British politics are creating new, but very different, opportunities for Labour.”

North of the border, meanwhile, Ed Miliband has come out strongly in support of Scottish Labour leader Johann Lamont’s controversial speech last week in which she cast serious doubts over the viability of universal services such as free university tuition, free prescriptions and a council tax freeze for all.

In a sign of the party’s attempts to reposition itself as one prepared to both accept and come up with difficult policy responses to the ongoing economic slump, Miliband yesterday declared in an article for the Labour-supporting Scottish paper the Sunday Mail:

“When Cameron and Osborne cut the ­Scottish budget, ­Salmond cut local government deeper. Even when the Scottish budget went up, Salmond cut cash to councils. The two men are closer than you think. They both demand a council tax freeze but don’t fund it.

“That means cuts to local services that people really rely on. We have frail and elderly people who deserve serenity in their old age but who don’t get the help they need – because carers are told they can only give 15 minutes of their time per visit.

“Teachers can’t ­photocopy basic materials for their pupils. Families ­pay more for childcare than they pay for their ­mortgages.

“That is not the just ­Scotland we all believe in.

“Labour are ­producing the ideas that will shape Britain’s future and allow us to build an economy that works for all working people, not just a few at the top. That is why Johann Lamont was right to start the debate this week on how we deliver social justice in times of scarce resources.

“This isn’t just a ­Scottish ­question or a British question. This is a question for every nation in the western world and ­everyone who believes in a fair society.

It will be a tough debate but no one is ­better placed than Johann to lead that debate for Scottish Labour. Politics ­cannot be reduced to cheap promises that aren’t kept. It’s not an auction to fool the public. We need to be honest about what kind of country we want. And to be honest about what we can afford.”

His remarks, however, are likely to be further seized upon by the SNP as a sign Scottish Labour are now joining themselves to the hip of the Conservatives and once again raise the mess that has seen Labour in Scotland and Wales on divergent paths, with Labour in Cardiff clear in its robust defence of its universal free prescriptions policy.

Summing up the problems Scottish Labour now has, the Sunday Herald’s editorial, under the banner “Labour still lost in the wilderness”, concluded:

“Denied power at Holyrood for a second term, Labour appear so warped by their tribal hatred of the Nationalists that they would rather align with the Coalition than the SNP. Instead of recognising a fellow progressive force, they would rather collude in dismantling the welfare state. It is a pitiful sight.

“Lamont and her party need to aim far, far higher if they are to restore any credibility in the wake of this dire week.”

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